1999 (8) TMI 68 - SC - Customs

Claim for concessional duty under Excise Notification No.185 of 1983 denied due to failure to prove duty payment

SC held that appellants were not entitled to concessional duty under Excise Notification No.185 of 1983 because they failed to prove payment of the ... Imposition of additional duty on imported consignments of polyvinyl alcohol - Whether the appellants were not entitled to the benefit of the notification whereby reduced rate of duty could be paid? Held that:- It appears to us that the Excise Notification No. 185 of 1983 was deliberately worded in such a way that the importer of polyvinyl alcohol, who may not be able to prove that on the raw material appropriate duty in India has been paid, will not be able to get the benefit of the concessional rate of duty. It has to be borne in mind that the normal duty which is payable on polyvinyl alcohol is 40%. That is the rate of excise duty which would be payable by an Indian manufacturer of polyvinyl alcohol who is unable to show that he has complied with the condition contained in the proviso, namely, use in the manufacture of vinyl acetate monomer on which appropriate amount of duty has been paid. It is possible that vinyl acetate monomer manufactured in India is exported and the same is used in the manufacture of polyvinyl alcohol which, in turn, is imported into this country in which case the importer would be able to show that the condition stipulated in the said notification has been complied with. Vinyl acetate monomer is an item which is manufactured in India and a rate of excise duty is leviable thereon. On the polyvinyl alcohol which has been imported, vinyl acetate monomer has not been subjected to the appropriate amount of duty payable under the Indian law. It is only if this payment had been made that the Notification No. 185 of 1983 would have been applicable. Appropriate amount of duty would mean the duty payable under the Central Excises and Salt Act or under the Customs Tariff Act. Because this condition had not been satisfied in the present case, therefore, the appellants are unable to get the benefit of the said Notification. Appeal dismissed. Issues:1. Interpretation of Section 3 of the Customs Tariff Act regarding the imposition of additional duty on imported consignments of polyvinyl alcohol.2. Applicability of Excise Notification of Exemption in determining the duty payable under Section 3 of the Customs Tariff Act.3. Requirement of proving payment of appropriate duty on raw material under the Excise Act to avail the benefit of reduced duty rate as per the exemption notification.4. Whether the benefit of reduced duty rate can be claimed if the appropriate duty on raw material has not been paid under Indian law.Analysis:1. The case involved the interpretation of Section 3 of the Customs Tariff Act concerning the imposition of additional duty on imported polyvinyl alcohol. The appellants contended that they should pay duty at a reduced rate similar to Indian manufacturers, who paid a concessional rate of 10% ad valorem. The Tribunal held that the Excise Notification of Exemption could not apply in determining the duty under the Customs Tariff Act, based on the Schedule of the Excise Act. However, the Supreme Court clarified that the duty rate should be that of an Indian manufacturer under the Excise Act, not the normal rate of 40%.2. The Excise Notification No. 185 of 1983 exempted polyvinyl alcohol from excess excise duty if the appropriate duty on the raw material, vinyl acetate monomer, had been paid. The Court emphasized that the onus is on the assessee to prove compliance with the conditions of the exemption notification. Failure to prove payment of the required duty on the raw material would disqualify the assessee from availing the reduced duty rate. The Court highlighted the strict construction of exemption notifications and the necessity to fulfill the specified conditions.3. The Court rejected the argument that the appellants should be entitled to the benefit of the exemption notification because no duty had been paid on the raw material, vinyl acetate monomer, in India. The Court emphasized that the duty must be paid under Indian law for the benefit of the notification to apply. The appellants could not claim the reduced duty rate as the condition of paying the appropriate duty on the raw material had not been satisfied, thereby upholding the denial of the benefit of the notification.4. The Court concluded that the appellants' appeals lacked merit as they failed to demonstrate compliance with the conditions of the exemption notification. The appeals were dismissed, and no costs were awarded. Another related appeal was also dismissed for similar reasons, with no costs imposed. The judgment clarified the strict requirements for availing reduced duty rates under exemption notifications and highlighted the importance of proving compliance with specified conditions for such benefits.